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Assume that the expectations theory holds, and that liquidity and maturity risk premiums are zero. If...

  1. Assume that the expectations theory holds, and that liquidity and maturity risk premiums are zero. If the annual rate of interest on a 2-year Treasury bond is 11.5 percent and the rate on a 1-year Treasury bond is 13.5 percent, what rate of interest should you expect on a 1-year Treasury bond one year from now? Calculate your answer using the geometric average. State your answer as a percentage to 2 decimal places (i.e. xx.xx)

5 points   

QUESTION 94

  1. Your grandparents deposited $5,570 for you when you were born 18 years ago. Today, the account (to which no other deposits have been made) is worth $206,637. What annually compounded rate of return has the account earned? State your answer as a percentage to 2 decimal places (i.e. xx.xx)

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jeff jeffy answered 1 week ago
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